29 ms·

Would it though? The government paid for my college then wrote down I own them. They want me to give them that money back eventually. Are they using my promise

Would it though? The government paid for my college then wrote down I own them. They want me to give them that money back eventually. Are they using my promise to borrow money somewhere else? Or is it just an expense for a budget year that gets added as income years later? Also how much interest have we paid collectively on that 1.5 trillion? If we've paid that much already then what? Can't we just consider it an investment with a negative adjusted return and move on? In other words macroeconomics doesn't make sense to me in a lot of ways.

hpoe 5y ago
Well it would result in deflation because $1,500,000,000 disappears from the economy overnight. This means that the money supply shrinks and that kicks of a deflationary cycle.
- thatfrenchguy 5y ago
  I would argue this would actually cause inflation: all of those folks who have to pay for those student loans will start buying more goods, houses and services, increasing demand, which could increase prices in turn.
  - hpoe 5y ago
    Well you would be wrong. Inflation doesn't just happen because people are buying more things. Inflation occurs when more money is brought into the system but the amount of goods remains constant.
- AnimalMuppet 5y ago
  I think you may have that backwards. There are two scenarios. In the first, the government simply prints the $1.5T. That's newly created money. $1.5T has been added to the economy overnight. It's been created, not destroyed. The second scenario is where the government takes the money from somewhere else (maybe taxes). The money is removed from somewhere (someone's assets), but the exact same amount of debt is also removed. The net is zero - neither creation or destruction, just rearrangement.
voxic11 5y ago
If you went to school before 2011 this likely isn't how it worked. Instead you actually got a loan from a private lender which was guaranteed by the federal government. The ACA changed this so that the federal government now actually originates and owns the loan. > Prior to the Affordable Care Act, a majority of student loans originated with a private lender but were guaranteed by the government, meaning taxpayers foot the bill if student borrowers default. In 2010, the Congressional Budget Office (CBO) estimated 55% of loans fell into this category. Between 2011 and 2016, the share of privately originated student loans fell by nearly 90%.
- keanebean86 5y ago
  I completely forgot about that honestly. I used some special refinancing offer so all my loans are direct now.

hpoe 5y ago

Well it would result in deflation because $1,500,000,000 disappears from the economy overnight. This means that the money supply shrinks and that kicks of a deflationary cycle.

thatfrenchguy 5y ago
I would argue this would actually cause inflation: all of those folks who have to pay for those student loans will start buying more goods, houses and services, increasing demand, which could increase prices in turn.
- hpoe 5y ago
  Well you would be wrong. Inflation doesn't just happen because people are buying more things. Inflation occurs when more money is brought into the system but the amount of goods remains constant.
AnimalMuppet 5y ago
I think you may have that backwards. There are two scenarios. In the first, the government simply prints the $1.5T. That's newly created money. $1.5T has been added to the economy overnight. It's been created, not destroyed. The second scenario is where the government takes the money from somewhere else (maybe taxes). The money is removed from somewhere (someone's assets), but the exact same amount of debt is also removed. The net is zero - neither creation or destruction, just rearrangement.

voxic11 5y ago

If you went to school before 2011 this likely isn't how it worked. Instead you actually got a loan from a private lender which was guaranteed by the federal government. The ACA changed this so that the federal government now actually originates and owns the loan. > Prior to the Affordable Care Act, a majority of student loans originated with a private lender but were guaranteed by the government, meaning taxpayers foot the bill if student borrowers default. In 2010, the Congressional Budget Office (CBO) estimated 55% of loans fell into this category. Between 2011 and 2016, the share of privately originated student loans fell by nearly 90%.

keanebean86 5y ago
I completely forgot about that honestly. I used some special refinancing offer so all my loans are direct now.